Earnings Call: Q2 2021

Aug 17, 2021

Good day and thank you for standing by. Welcome to the NKT Q2 Report 20 21. At this time, all participants are in a listen only mode. After the presentation, there will be a question and answer 21. I must advise you that this conference is being recorded today, Tuesday 17th August 2021. And now without any further delay, I'd like to hand the conference over to your speaker today, Mr. Alexander Kara. Please go ahead. Thank you. Good morning, everybody. Thank you that you take the time to listen to our Q2 results of NKT and NKT Photonics. I have here in the room with me Lene Sandroop, my CFO and Basil Karabed, The President and CEO of NKTR Photonics, which we will hear later. If we come to The Q2 numbers, and we have pre announced Q2 results on the 16th July. So you will not hear too many well, no surprises. So we have disclosed already EBITDA revenue for NKT and Photonics, and we have Updated our guidance as such, no surprises to be expected in this call. So overall, key message for Q2 is We had a good organic growth, satisfactory quarter overall for both NKT and NKT Photonics, 20% organic growth in cables and all the 3 business lines contributed to the revenue growth and also to the earnings. And this is the highest EBITDA result since 2017. Further, we have some other wins, Troll Best an AC cable with Equinor and SSES customer and Tugger Bank C, a DC Offshore wind farm in UK, which completes then the Dogger Bank cable order where we had already received Dogger Bank A and P. So in Photonics, we had the highest ever Q2 revenues of 28% organic growth, which was mainly driven by the industrial segment, which is also great. Further, the Board of Directors has decided to resume the strategic Review of NKT Photonics. If you look at now the performance, as I said, a satisfactory Quarter, the best since 2017, 21% growth. And you can see that here also On the chart and in solutions, we had a good utilization in the factory with different kind of orders, which we produce using cable types and then 2 awards, as I mentioned already, which bring us back to a record high order backlog of €3,160,000,000 in market price, which is, of course, great as it increased our visibility and planning capabilities for the way forward. Also in application, we continue to improve on the performance, financial performance. We have increased revenues and Also the earnings efficiency and I come a little bit later back. Service and accessories achieved the highest In the quarter, we had an exceptional good quarter, in particular in service with repairs. And this, of course, contributed strongly to the result of Q2. If we go then to solutions, here, as I said already, we had different type of cables Produced in Karlsruhe and Cologne, DC like Dokabank A, AC, offshore like Ostwind, Troll with for oil and gas with Equinor And Viking Mi cable. So good mix of cable production in solutions and as such a good utilization in the factories. Then, Varin, what is also highlight the completion of the Nordnerklink interconnector From Norway to Germany, this is also personally for me a great achievement. As I have in 2014, There was 2014 personally involved in this tender on the ABB. And finally, this project is now in service. So 2,450 in the ward, quite long time, which it takes actually To install such large order, but a great achievement and good to see that. So the NKT Victoria was busy in Q2 with several installation, also first half was a good utilization. And what we are looking now in We have started already in application and accessories looking on structure optimization of the business. We have initiated the process for solution, how to optimize the solution business from the cost structure, The portfolio and this we have also pre announced and with the EUR 40,000,000 up to EUR 40,000,000 Cost, which is a mixture of CapEx and other costs. Looking at high voltage market overall, I think what is good, there's around SEK 2,000,000,000 which have been awarded in the first half, which is good for the industry and which helps industry to increase the utilization, which is great for all. And as I said, we have been successful with Drol West in Norway, AC Offshore table with dynamic sections and the Dokabank C, which completes the total Dokabank order. And we are busy with and continue with tenders in a different market segment. The majority of the orders which have been awarded in the first half have been DC and some AC. And you see on the right side TokaBank C and ROL, which have been added to our backlog. Going to now So the backlog with these two orders, we returned back to a record high backlog of €3,160,000,000 in market price, which gives us good visibility and planning capabilities For the future, so we are now back on this high record level with Stokke Bank, C and FOL West. Looking at Application. Application, we have increased revenues to CHF 124,000,000 Up 6% and also the earnings have improved to SEK 7,600,000. So we see Here, results of our actions improvement actions what we have taken and we expect that this trend continues. We have also progressing on the moving building wires from Essness in Denmark to Poland to have a focus factory concept. So this relocation is ongoing And but it will take some time, obviously. And also on the medium haul side, we had some good momentum in the market In the Nordics, whereas other markets we had a little bit weaker. So good traction in applications And more to come in the coming quarters. Service and Accessories, It's a really good quarter, I would say, with €65,000,000 on revenues compared to 36,000,000 The same quarter last year, 90% growth, mainly driven from the service with several Repairs, offshore repairs, but also good traction on accessories with medium beltfish accessories from Nordenham in Germany. Also, we have worked on optimization on the business. And as we have announced earlier, We concentrate the high voltage and self-service business in Harlingsoas in Sweden and move those production capacity concentrated in Alixdorf and moving from Cologne to Alixdorf. Dollars 14,500,000 EBITDA, quite nice achievement For 1 quarter, unfortunately, this is not to be expected to continue as it was also with driven by repair orders. So with this, I think you have the highlights of the cable business. And I would now hand over to Basil, who will Give you more details on Photonics. Good morning and thank you, Alex, and what a great quarter for cables. It's getting harder and harder to catch up. So let's start with Photonics. We had a great quarter. It's a great satisfactory quarter. We had the highest revenue for Q2 in Photonics. And the revenue improved as well as EBITDA and it's compared to last year, which was obviously impacted by the COVID-nineteen pandemic. Our organic growth was 28%, which was driven by a very good growth in industrial. Medical and Life Sciences had a modest growth And Aerospace and Defense had a modest growth year to date, but the actual quarter was up 30%. So we're seeing Some fluctuation in organic growth in the defense side, but it's if you take it over a year, it's relatively steady. We're very pleased with the way it's performing. And obviously, due to the higher revenue, our EBITDA increased Earnings, including redundancy costs, were at 0 EBITDA because we had something €400,000 of redundancy costs. The other good thing that is happening in the quarter, which is very pleasing to us is that our order intake was also at a record high. It's at 41%, which is an all time high for Q2. Again, very pleased. We've been working very hard with our customer and our customer base to improve The business going forward and it's good to see it come home. And finally in July, July 16 to be exact, the Board of Directors decided to resume the review of strategic alternatives for NKT Photonics. Go to the next page. In the business development, the Medical and Life Sciences was driven mainly by our microscopy and our ophthalmology Business is doing well. We're getting more traction in the ophthalmology field and we expect actually that To grow and it's one of the focus areas for the company. We have ideal products that fit in there. We're also benefiting from release of a number of different products that we did last year. In the industrial segment, which is our biggest segment and also is Major tools in the manufacturing area of semiconductor, that's doing relatively well. That's also The other area that's doing very well in our industrial area is the quantum, anything from quantum research etcetera. There's a big hold from our customers in that. In power cable monitoring and distributed acoustic sensing is also doing well and we are in sort of record high order intake in that side. And finally, in aerospace and defense, It's the smallest activity we have that growing. The project level activity is very high. Again, something that is nice to see and we see that So growing also in the U. S. Going forward. And with that, I will hand it over to Lina. Thank you. Thank you very much, Vergeline. So after the go through of the business, Just the go through of the financials. And if we just have a look here at the income statement highlights, I think, dwelling on the organic growth and the change this quarter for both companies, NKT cables is coming out of a solid growth even in 2020 and now further to that 21 percentage growth on the Q2. So there's a lot of things underneath this going on, as Alex also alluded to. And then for Photonics, on the growth also to see that The 2020 path has changed and now we're looking into a very, very solid growth. So Overall, very satisfactory for the company, I suppose. And this also boils into some earnings that are strong in the quarter, €42,000,000 on the total for the company on operational EBITDA and this constitute of the cable part with the EUR 42,000,000 which is a EUR 26,000,000 increase compared to last year in the same quarter, But also Photonics coming into at breakeven. If you just read a little bit about, let's say, the seasonal pattern of Photonics, We now have ahead of us a second half, which is usually the high end of the Photonics earnings level. So on the margin level, this, of course, also pans out into good results. So this is really great to see. The net Result for the company is positive and comparing to last year at the same time we are off by a penny. If you just have a look on the FTE side also, you see here that the corridors expansions in the solutions part is adding Some to the growth in NKT cables and NFTs, but also the underlying changes in the factory footprints In applications and in accessories, it's also impacting here where you see it change for the coming periods also. And in Photonics, you see the opposite of the you see the restructuring that Basil alluded to, taking the FG numbers down a little bit. We had no one off items in Q2. In Q1, we had the stimwheel, but that's also, Of course, a part of the good earnings level of the Q2 that we didn't have anyone on. If we go into the balance sheet highlights, here you know that the working capital changed significantly from the Q1 of 2021. I'll now come back to that. I can say here that it's primarily coming from the Solutions and Applications business. In Photonics, on the working capital, that's Clear an improvement due to a more effective collection of trade receivables. And going down to the ROCE, you see the company as Turning into positive. This is, of course, very much impacted by the improved profitability in the CapEx division. And you see the net interest bearing debt impacted, of course, The working capital changes for the quarter, but coming significantly down compared to last year at the same time, of course, due to the Capital raised in 2020. Our leverage level in IBD to operating EBITDA is at 1.7x EBITDA for the quarter And with an expectation that with the what we'll see in the working capital expected improvements that it will come down again. If we go to the next slide on the working capital. So from the Q1 of minus SEK65 1,000,000 to Q2 of SEK113 1,000,000. This is due primarily to Solutions and Applications here. As you know and we talked about earlier, the Solutions business is very much Prepayments and milestones in general. And it is so that this quarter, we actually have a phasing of the milestones that impacts us unfavorable on the Solutions business. This combined with the hedging instruments that we run as a business Here drove up the working capital quite significantly. Overall, the commodity prices is, of course, also impacting NKT. And you can say When the metal prices go up, our receivables increase corresponding more or less and the payables decrease more More or less have a neutral effect against that. And then you see, of course, also inventories, raw materials, anything we have a stock also taking Some of that metal pricing. But important to say here also that we are working on, let's say, The internal elements of the inventories on accounts receivable, dental, denture and the milestone payments and where some of these effects are more or less also related to the seasonality of summer buildup on inventories and the hedges. So this would be coming down in the quarters to come. And then having a look at the cash flow statement and the free cash flow for the period, loan capital, The change here, of course, is not favorably impacting the free cash flow. But mostly say that the EBITDA, of course, positively contributing To the level whereas our continuous investment in the expansions in Cologne and Karlskronen It's also taking down our free cash flow. We are on good track on the expansion program, and you will see over the second half also that the investment level continues to be impacted by these investments. Coming to the next slide on the outlook for the year. As we came out on 16 July with a specification to the guidance, there's no Change to this now. We expect the NKT cables coming out in the upper end of our revenue guidance and of €1,100,000,000 to €1,200,000,000 and similar in the operational EBITDA between €80,000,000 to €110,000,000 where we'll be in the up end. NKT Photonics changed the outlook for the year on 16th July based on the good performance seen. So now we are looking into an 8% to 15% organic growth on the revenue and an EBITDA margin of 6% to 8%. So just to recap the key messages of Q2 here. A strong organic growth in NKT cables across all business contributing positively and getting the operational EBITDA to the highest level since 2017. Our backlog returned to a record level of EUR 3,160,000,000 in market prices based on also the awards from Troll and Dougurbanksee. And Photonics having the highest ever Q2 revenue with 28% organic growth compared to last year. And finally, that we have decided the Board of Directors have decided to resume the strategic review of NKT Photonics through the time ahead. With that, I'll pass over to the questions 21. We already have a few questions in the line. Your first question today comes from the line of Christian Johansen of Danske Bank. Please ask your question. Thank you. I've got 3 questions. So the first one goes to the mix in Solutions. So as your guidance implies a lower earnings and you have talked to this worsening of mix going into the second half, I understand you sort of You expect it sequentially to worsen in Q3 and then worse further in Q4. So firstly, whether That is correctly understood. And secondly, when do you expect then this mix to improve again? Yes. Okay. So Christian, as I said, we have In Q2, a good mix on different cable types. And this is changed a little bit in the second half, A little bit unfavorable. And so we just won the 12 S as an AC order. So ideally, we want to have The optimum mix in the factory image would ensure maximum or best or let's call it best utilization of the Solutions factory. So it depends very much on the orders wins. And then, of course, also the second half is somewhat weaker because we have a record high Q2 in the service and accessories business, as you wrote also this morning in your report. So this will somewhat weaken the second half of the year. I understand. If we look at just Solutions though, I mean, I guess that there's probably a limited amount of orders which can really change the second half given the amount of months left. But then looking into the beginning of next year, do you still see opportunities To optimize that mix for sort of first half twenty twenty two? Yes, absolutely. I mean, I want to also mention, we have run sometime back a major part of the German corridor projects, which we expect also to start production next year. And this, of course, will also contribute, I'd say if you want to say not really new segment, but quite massive amount of cable and that will help. So But we are not yet there. We have not come out for guidance for next year. So this will tell when it's time to do so. And then through West, AC order helps, yes. Understood. Then my second question, this investments into the Solutions business So you expect to spend EUR 40,000,000. I understand you're reviewing this, so that the exact actions are probably not in place for you to share right now. But can you maybe then elaborate a bit on the motivation? I mean, why have you felt the need to make these changes? No, Denise, it's very simple. I mean, I started the job here in NKT to improve the result of NKT. And We have done good progress in the last two years. Also have imitated a lot of actions in application business where we see some The results and this we expect to continue. We see we have taken actions on footprint. If you take if you look at 1 kV Movement, the building wire movement, accessories, high voltage concentration in howling source, Then optimization in factories and different actions. And we have also started on the solution side to look on improvements. And now we're looking to further improvements and further improvements, also Look at the cost structure and what can we improve the business to increase our competitiveness, particularly in the lower Lower profitability segment to get a broader part of the market, we can build our market share. So this is just a continuation what has been started already in other business lines. And this will continue on Until we are on the level where we say we are satisfied, which was most probably never happened. Fair enough. When do you expect to have the plan ready to share with us in terms of exact timing and then Potential, I mean, earnings upside to these investments? I mean, we I think we will, During the second half, come out with some more detail. Understood. Then my last question is Just on these repair jobs, obviously, it's fairly evident that they were quite profitable for you in the same quarter. Can you just Comment on what amount of repair works you have been doing in here in Q3 so far? No. We did we had several repairs. For example, the Britnet repair, which is an MI cable, which is a quite complex Project, what the current contract project is from U. K. To the Netherlands. And then we have the Baltic 1, which is an offshore Winfarm from 50 Hertz. So there were several, but just by coincidence concentrated. And We had another repair, not the full repair offshore on with Tenet. And this contributed to these results. But again, as also you wrote in your article, this is not planable. And such We cannot assume that we will have in the second half of this year the same pattern. So But of course, we work with service agreements with customers. And with those customers, when we have service agreement, if a repair happens, Then this will be a repairable of order to NKT. So but okay, if there will be a repair from external factors, We are not planning on. I guess my question was more on whether you have Initiated any larger repair works here in the Q3? Sorry, sorry, I misunderstood. No, no, no, no. There's No, no other large insight. Not that we are aware of any external cable which has a problem. Understood. Thank you. That was all for me. Okay. Thank you. Your next question today comes from the line of Max Yates of for Credit Suisse. Please ask your question. Thank you. Good morning. Just my first question is on the Solutions margin. So you did 14.1 percent in Q2. It sounds like the factories were well utilized. It was a good mix of projects. I'm just trying to understand as we look out into 20222023, Is there room to improve margins from this 14% level? Or is this an example of when everything goes right, you have good mix, This is the kind of level the business should be achieving. I'm just trying to understand kind of if you look at this quarter as an example, what additional levers there are that you can pull to move margins higher from that 14% level? Or is that a fair reflection? Yes. Yes. I mean, in general, to improve further margin, this can happen if we have The utilization and have a good mix. And then as we just announced also, we look at the Structure of the cost base of the Solutions business. And this should also lead to an improvement of earnings, this is why we have initiated this process. Then we also expect that the German corridor We will start production next year. So but we are not yet here on the guidance Discussion for 2022 or 2023. So we work on it, obvious, to improve further. That's the plan. Okay. Fantastic. And just my second question would just be thinking about your the balance of your backlog when we look across sort of years in 2022 2023 and also the types of cables in your backlog, both AC and DC. And I just wanted to understand, Do you view your backlog as relatively balanced when you look at kind of when you will be or when your factories will be utilized in 202220 '23? Or are there sort of certain technologies, which we should be looking out for where you really need to win some orders to make sure that your utilization is relatively balanced across 20222023. So just to understand, yes, the different technologies and phasing that it's balanced? Sure, sure. So I mean we were quite successful overall In the past quarters on order wins on the DC technology, but also on AC, as this quarter, we just Announced at all this AC trickle cable. So but we have more capacity and on the AC side and also on the Mi side. So For Mi, there is no project yet awarded, and that will be difficult for 2022 as it takes also some time. So what we have capacity to take some more orders and also particular on AC and MI in the let's say, which impact AC22, MA2023 rather and then 2022. So still more possibility to further optimize the factories If awards are there and if we are successful, no? A lot of ifs, but of course, we have also other areas where we look on building the business. Okay. I mean, do you not do you see that as an issue when you look at the Mi project pipeline? Because my understanding is that Your margins in Solutions in Q4 are weakening because you're finishing the production of Viking Link. Just to understand, as we go into 2022, do you see projects out there in MI that can fill this capacity? No, there is projects which are out, but there is always a delay From what until you start production? I don't say it is an issue. I just say with additional AC and MI, We could in turn optimize it. On the other side, we have also the German corridor projects, the PC Land cable, which we will start next year. So that also contributes to the loading and the mix of the factory. Okay. And just finally on the Photonics process. And I mean, I realized you've only just Restarted the process, but assuming that you are able to dispose of this, could you maybe talk a little bit about your Capital allocation priorities, balanced across paying down sort of debt and hybrid bonds, thinking about additional shareholder returns, how you see those for the group? On Photonics, just to answer your question, No decision is made yet on disposal or anything. It's a strategic review And we have not concluded on that review. We've just started it as you mentioned. NLT We'll take however long it takes to conclude and then we'll announce what the conclusion is and what the results will be. And Dini here, just to build on Basil's comment in terms of proceeds and your question there, right, of course, multiple options, as you also mentioned, and none to We decided that's up yet. So now we'll do the review and conclude that and then, of course, look into how Thank you. Your next question today comes from the line of Akash Gupta of JPMorgan. Please go ahead. Yes. Hi, good morning, everybody, and thanks for your time. My first question is again on the guidance. I think, I mean, you had very strong performance in the first half. And I guess that part of that is driven by these one offs in service, may come, may not come in the second half, but still at €110,000,000 it's €37,000,000 implied for the In half against SEK 73,000,000 in first half. So I wanted to understand how much of this is driven by you being conservative because of the Previous disappointments that you are not raising the top end of the guidance range now or to what extent it's driven by the mix in the projects which may not be fully captured in consensus estimates? I'm Karsten, it's Linn here. So I think fair to say, as we repeat that the Utilization of the factories is the number 1 in terms of the cable business. Execution and good margins to bring up The earnings right. And what we're looking now at the visibility we have, we see that we will come out at a different level. And certainly also that the services is not to be predicted, which kind of repair jobs we have. And then maybe also the note that this business is a project business. And as you know, also From the history and our competitors, that can be rather large swings, Which will always make us at least considerate about any unexpected events that could come. But not to say that this is the main part of it, but that will always allow us or make us be considerate when we do any kind of adjustments to our guidance, what would What would that mean? And my next one is on solution full year revenues. So you reported CHF 323,000,000 for the first And you are indicating around 10% backlog to be converted into sales in the second half And 10% of €2,660,000,000 will give me around €5.90,000,000 or slightly below €600,000,000 revenues for solution. Is that the right math? Or are these numbers are rounded, which may indicate that you may have higher revenue potential in solution for the year? I mean, 10% is a rough number. And we said, Akash, That we expect somewhat weaker second half. And So we will see, yes, and we will work on it. And there could be also some In and out orders, which helped to improve the numbers, you have always in the cable business and the large projects, Variation orders, which could improve the revenues, but these are really short term Revenues improvements on variation orders, this needs to be seen. So For the time being, we will not unlikely, let's say it like this, that service will have the same Strong second half than the first half. I would not call the service one off, yes, if you want to call one off. It comes also not You need to do something to get these orders, right? It's not just you have a write off of some numbers because of So we work on it. And of course, we do everything to improve for the time being, but we see it's somewhat weaker. And then my final one is on market share in both Solutions and Repairs. So In Solutions, I on my back open will have calculation, you had roughly 20% market share in first half order awards. And when we look at the second half orders and as we hear from some of your competitors in terms of complexity of the projects like Eurasia and others. And can you say is 20% would be fair assumption for second half orders? And then coming back on market share in repairs, I mean, I think your performance kind of stood out against competition where basically we haven't seen that strong and the repair performance in the first half. So I wanted to ask, is there anything that you have changed in the organization, which is why you are Gaining market share here and these things should we expect to continue in foreseeable future? Thank you. Yes. I mean the market share is obvious. It can vary in quarter Well, even within a half year, quite substantial, depending on how your success rate is on orders and how is The size of the orders awarded. Last year, we had a very high orders intake, which increased our market share beyond the 20%. And of course, we are now with 1 point Sorry, the SEK3,160,000,000 market share backlog is a very high level. And Akash, of course, our investments It's aligned that we cover backlog and the future orders intake. So we need to see how that matches our capacity. So we need to see also how much can we take in and as we need to also deliver. So about the market share in the second half, This is very much dependent on the wind that comes, and that can also vary quite a lot. Will the large interconnectors be awarded? To whom? Will smaller be awarded? So In average, of course, we plan to keep over the period our market share, LTM spoken. And the repair, we have not done specific actions on the organization. So we focus on ready preparedness orders to get more in, which increases the likelihood of Getting it appears if it happens with those customer and these specific projects, what they have, of course, done already early when I joined NKT is split intentionally the business line in a more in focused business line service Separately, accessories separately, application and so on. In order To have a clear focus here and to get also certain Yes, we are sold from the past and also to prepare for the future. So that wasn't I have intentionally increased The span of control in the organization, and that is maybe the combination of certain actions. We see some results, but definitely the repair is also somewhat just statistically more predictable. And to a certain extent, it just happened in Q2. Thank you. Thank you. We do have one more question. Your next question today comes from the line of Klaus Almer of Nordea. Please ask your question. Thank you. Yes, I have also a few questions. The first question goes to the pipeline. Alex, I think you gave some soft comments about awards. So when do we expect the next larger project awards coming to the market? That will be the first one. I mean that is difficult to answer. We see Yes. Potentially, some delays in the CFD in UK, which might slip into What we expect that originally end of this year and then beginning of next year, it could even move further out. So these large Projects and their awards, they have their own dynamic, which is actually not in our control. It really Depends of the customer and even on the authorities and permits and financing and you name it. There are Several aspects of the super large interconnectors in particular. So I cannot tell you here When a NeuConnect or for example, or others will be awarded, that would be a pure speculation. So we need to see, as you know, on some projects, you work for potentially years. Some takes and And then this is a little bit the nature of this large infrastructure projects. Sure. I know we have learned the hard way in the past that projects are very difficult to predict the exact timing of. But do you expect More projects to be awarded this year? Yes. Sorry. Yes. Okay. Good. Yes. Okay, good. Then the second question goes to the guidance. I guess, Elyse, that the service division has Exceeded your own expectations. Is that a fair assumption? Exceeded own expectations. My team needs to do a lot to exceed my expectation. But let's say, they definitely have an outstanding quota, Absolute. And also performed well on executing these repair jobs. It was more like compared to the guidance when you started the year and what you included for the service division. I would assume, Elyse, that the Service division has done better. Yes, yes, yes, you are right. And then this There was maybe a slightly nasty question because then if something goes better and you are reiterating the guidance For the cable division, then something else must has underperformed to maintain your guidance. Is that the way we should look at it? Or is it like Dina said, let's see this is a project business and there Might always be some swings in the performance? No. I mean it's not that the other business has less I would not call it like this. We have now just also specified the guidance to the upper end. So before we said 80 to 110, now we say upper end, which means closer to the 110. And I think consensus That's on the 12th. So this is where we are. So we have changed or specified the guidance. So I will not say That other businesses is performing less. So let's see. And we work on the second half and work on hopefully, that we can present good results. We hope so. Yes, thanks. And then just my final question, which goes to Basel. In the report, it was mentioned these Possible component shortage and you're doing something to mitigate a possible situation. So what are you actually doing? And what's The risk for component shortage in the second half this year? Hi, Klas. Yes, I mean, obviously, there is a risk and We are mitigating on several fronts. We are buying ahead of time on a number of Components are very specific in our production, very specific in the possibilities of shortages. In general, we see most of our suppliers having delays. The delays are not In months, they're more in weeks. So we are mitigating against that as well. It's hard to see because it's a dynamic situation at the moment. And we are also qualifying other suppliers to the strategic components that we might have shortages on. So far, the delays have only, like I said, been in a number of weeks rather than months or quarters. Okay. That's good to hear. And then I'm a little bit unsure about this strategic review timing. Did you say anything about when could we hope or expect even an outcome of your work? Well, as you know, it just started. So we announced it on 16th, which is A month ago and through the holidays. So the process is just starting and we'll announce it in due time. So no guidance whether this will be this year or next year? But that's all part of the review is to see Look at the options and what we're going to do with the assets. Sure. Okay. But by the way, great quarter. So thank you so much. Thank you. Thank you. Thank you. It appears there are no further questions at this time. Please continue. Okay. Then I think we if there are no further questions, thank you for your good question and that you took the time to listen So Q2 results. And I hope you have a good day and hope that we talk again when we have the Q3 numbers ready, Of course, with hopefully with good numbers. Thank you very much. Have a good day. Bye bye. That does conclude our conference for today. Thank you all for participating. You may now disconnect.